Logistics is concerned with managing the movement of goods between a point of origin, such as a factory, and the end user, such as a customer within various time, resource and cost constraints. Logistics typically involves the integration of factors such as material handling, packaging, warehousing, inventory, transportation, information, security and financial transactions.
Last mile logistics is concerned with the final stage or stages of delivery. For example, imagine a letter posted in Marston, near Oxford in England destined for a house in Mooroopna, Central Victoria, Australia. The path for the letter is likely to be from a post box or post office in Marston to Oxford Post Office by mail van, Oxford to London Central Mail Exchange by train or road, London to Melbourne by air, Central Mail Exchange in Melbourne to Shepparton Post Office by road or rail and Shepparton to Mooroopna Regional Post Office by road. The local postman delivers the letter to its final destination on foot or by moped. The last stage of delivery by the postman is referred to as “The Last Mile Logistics”. Since the logistics process includes the transportation and handling of the product, letter sorting and other processes that occur at the Mooroopna Regional Post Office can also be considered as part of the Last Mile Logistics.
FIG. 1 shows the traditional supply chain distribution model with goods moving from the supplier to a distribution centre, which can also be a warehouse or wholesaler, to the retailer and to the final customer. The role of the warehouse/distribution centre is typically a multifaceted process. According to Rushton, Croucher et al., The Handbook of Logistics & Distribution Management, 4th Ed., the warehouse/distribution centre acts as the following:
Inventory holding point: This is the most basic function of this type of facility. It is not unusual for the facility to be a stock holding point for several suppliers and/or manufacturers.
Consolidation centre: Customers often order a number of product lines, and would prefer a single delivery. The facility consolidates the various orders and origins into the one delivery.
Cross-dock centre: If goods are brought from elsewhere in the supply chain specifically to fulfil a customer order, then they are likely to be cross docked. This simply means that the goods are transferred across a dock from the incoming vehicle to the outgoing vehicle via the goods-in and goods-out bays without being placed into storage.
Sorting centre: This is basically cross-docking, but tends to be used for the purpose of sorting the goods to a specific region or customer.
Break-bulk point: This is where “bulk loads”, be it containers, full pallets or full boxes, are broken down to smaller units for shipping to various customers or regions.
Returned goods centre: The handling of returned goods is imperative in the case of internet shopping, which tends to be associated with higher percentages of returned goods than in the case of store shopping.
Typically, a retailer or various retailers place their orders with the relevant wholesaler or distribution centre. These orders are either for physical requests by the end customer, or in anticipation of customer demand. Hence, the distribution centre is an inventory holding point as noted above. When orders are received at a distribution centre from an individual or multiple retailers, the distribution centre will aim for maximum efficiency by combining the various orders for the one location. Hence, the distribution centre is a consolidation point. Also, combining orders into logical geographic distribution locations or routes makes the distribution centre a sorting centre. The distribution centre also receives stock in pallet lots or box lots, which are broken down for on forwarding to the individual retailers in smaller lots. Hence the distribution centre conducts the break-bulk process. Finally, the distribution centre acts as the conduit between the retailer and the supply point, be it a wholesalers or a manufacturer. This conduit action includes the handling of returned or damaged goods.
With the everyday presence of the Internet and the advancement of personal computing devices including smart phones, online retailing, or e-tailing, and m-commerce, referring to transactions via mobile devices, has exploded. Many bricks and mortar stores also have an online store and many newly founded “stores” only offer their products and/or services online to reach a larger number of customers and to reduce overheads, such as rent and wages. More recently, large department stores have reduced the size of certain departments, such as electrical goods, which now offer a reduced range of goods within those departments. Other department stores have reduced in overall size or have closed altogether.
According to Monash University's Australian Centre for Retail Studies, more than half of Australian shoppers search online before purchasing from a store, and around a quarter use the internet for pre-purchase information about products, followed by those who use brochures/catalogues, product inspections, word-of-mouth and in-store service. Further, the following research by Google was presented at the recent National Franchising Convention: By 2013, smart phone sales will overtake PC sales; By 2014, the number of mobile Internet users will exceed desktop Internet users; 28% of Australians use a smart phone; In the period 2009 to 2014 the number of mobile users paying for goods and services using their mobile phones will grow by 600%. Australia traditionally follows the trends of the developed economies of western Europe and the USA.
The traditional supply chain distribution model shown in FIG. 1 can be compared with the supply chain distribution model for electronic commerce, shown in FIG. 2. One difference is that there is no need for a retail front, hence the often used term “clicks and mortar” rather than “bricks and mortar” for the traditional retailing. In an e-tailing environment, the retailer interface is removed. This means that the inventory holding point, consolidation, cross-docking, break-bulk processes are all handled by the e-tailer, or these functions are subcontracted to a distribution centre. Sorting of the goods may be done by the e-tailer or by the distribution centre.
The anticipated growth in electronic commerce will mean that the current distribution models will not be the most efficient to satisfy the customer demand. Examples that illustrate this follow.
In a first example, consumer “A” places an order for an expensive watch through a reputable web site. Under current practice, the website would directly dispatch the item to the purchaser's address, typically using a courier service or the regular postal system. If there is no one at home to sign for the parcel upon receipt, the item is taken back to the nearest Post Office or distribution centre for the courier. A calling card is left for the consumer to collect the item, or typically a re-delivery fee applies if redelivery is requested. Handling of valuables creates an inconvenience in that consumer “A” has to be present at the time of delivery; otherwise, delivery is not complete.
In a second example, consumer “B” is a rather busy person and regularly shops for groceries over the internet. Typically, the items ordered include meat, fish and vegetables. Under current practice, the website would deliver the order in polystyrene containers at an unspecified time. If consumer “B” is present at the time of delivery; then the delivery is complete. However, if consumer “B” is not at home, the polystyrene container is left outside the residence. The issues here are ones of security, where there is no spot to hide the box from the attention of passersby, or lack of access where security gates are installed. Also, in warm climates, the polystyrene containers may be insufficient to control the temperature of the perishable items.
Alternatively, the order may be delivered within a specified delivery window. For example, an am or pm delivery can be specified. This provides more flexibility for the delivery service, but is inconvenient for the consumer because they only have a vague idea of when their order will be delivered and must wait until it is delivered if the aforementioned problems are to be avoided. Shorter delivery windows are sometimes offered, such as a 3 hour, 2 hour or 1 hour delivery window. Whilst this is more convenient for the consumer, a delivery fee is usually levied commensurate with the specificity of the delivery window. Another problem is that shorter delivery windows are not always offered on all days of the week or at short notice, such as for next day delivery or even for delivery the day after tomorrow. Furthermore, shorter delivery windows increase the complexity of the delivery task for the website or delivery company, which is exacerbated with increasing numbers of orders and with shorter delivery windows.
In a third example, consumer “C” buys a T-shirt online. The T-shirt is delivered in a padded plastic bag that was of a reasonable size to squeeze into the letterbox. Consumer C arrives home and retrieves that T-shirt to find out that it is too small. Consumer “C” wants to take advantage to the Satisfaction or Return Policy offered by the website. The only way to do that is to repack the T-shirt and return it via the regular postal system or a similar delivery service. This means that consumer “C” has to make a special trip to a post office or courier depot to facilitate the return of the goods.
The above three examples clearly show that the consumer will be inconvenienced, although the available technology ought to bring about greater flexibility and convenience. Added to this inconvenience, there is inefficiency in the system. Some further examples are as follows:
Consumers “A”, “B”, and “C” in the examples above live in three different suburbs in the same city all within 1 kilometer from a common point along their travels. Under the present practices, there is a possibility, if not a likelihood, of three different couriers making the three different deliveries, even though they are within one kilometer from a common point.
Consumer “D” is just one consumer with all the various needs of consumers “A”, “B” and “C” combined. In other words, consumer “D” needs to buy a somewhat valuable item from a first website, a bunch of groceries and perishables from a second website, and several items of clothing from a third website. With the increase in online ordering, this type of consumer “D” is likely to exist with increasing frequency. Consumer “D” is all consumers, at random. Under the present paradigms, the last mile logistics will be performed by several independent operators each attempting to solve their own individual problems for the customer and creating several interfaces that may or may not work. Within all this, deliveries can only be made during work hours, typically Monday to Friday, or within predetermined delivery windows, which include the drawbacks discussed above. Deliveries outside the work hours or during the weekend are unheard of, or typically incur extra cost. Whether or not the various interfaces work, the likely outcome is, at best, consumer “D” will not receive maximum possible efficiency. At worst, the consumer will be inconvenienced and perhaps discouraged from putting too much reliance on the on-line buying system.
Various attempts have been made to address or at least ameliorate the aforementioned problems. One well known concept is that of the drive through or drive up, where customers place their orders from their vehicle via an intercom or to service personal in a kiosk or the like. The customer collects their order from the same kiosk or a different kiosk typically on the same site. In other drive through/up arrangements, the customer is required to leave their vehicle to make their selection and purchase, typically from a limited range of product offerings due to space constraints. Therefore, whilst drive through/up arrangements avoid the need for products to be delivered to the customer and address the problem of the customer not being home at the time of delivery, drive through/up arrangements only offer a partial solution.
The drive through/up concept has been extended to include an online ordering aspect. This can address the problem of limited product range due to space constraints. However, the customer must still make the special journey, typically a return journey, to collect their order from the drive through.
The concept of pack stations is also known, which are lockers similar to postal boxes, but for goods beyond just mail and parcels. An installation typically comprises multiple lockers of various sizes and an electronic console allowing customers to access their goods from a designated locker. Customers can also leave parcels in the lockers for delivery elsewhere. The lockers can be used by delivery companies as a storage point when customers are not at home to receive their deliveries. Pack stations provide a convenient pick up and drop off point for multiple customers, reduce private shopping traffic and related parking space demands and reduce overall vehicle distances and thus pollution. However, traffic problems around the location of the pack stations and increased traffic in peak periods are experienced.
A similar concept to the pack stations has been employed by some supermarkets to enable customers to pick up their grocery orders. The lockers are refrigerated to preserve the groceries until they are collected. However, one problem with this arrangement is that customers must pick up their orders from their designated locker between certain times, which is not always convenient for customers.
The reference to any prior art in this specification is not, and should not be taken as, an acknowledgement or any form of suggestion that the prior art forms part of the common general knowledge.